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Charity Commission publishes review of double-defaulting charities

17 March 2014

The Charity Commission has published inquiry reports into four charities that were under investigation as a result of double-defaulting on their accounts.

Michelle Russell, Head of Investigations and Enforcement said: ‘As the class inquiry into double defaulting charities carries on and reports continue to be published, we can see a number of different excuses featuring from the charities about why their accounts were late. None of these excuses relieve the trustees from their legal responsibility to file accounts with the Commission, or their duty to help maintain public trust and confidence in charities.’

The first phase of the inquiry, targeting 'double defaulting' charities with an income over £500,000, began on 20 September 2013, when the class inquiry opened. The Commission started the second phase on 11 November 2013, focusing on charities with a last known income of between £250,000 and £500,000. Failure to submit annual documents when required to the Commission is a criminal offence and the regulator says that it amounts to mismanagement and/or misconduct in the administration of a charity.

As part of the investigations, the Commission issued an order to obtain bank records and financial information for all four charities. In addition, the regulator exercised its statutory power to direct the trustees of all four charities to prepare and submit the missing information, and to extend the deadline for the trustees of one charity to submit their outstanding documents.

Once the charities' missing documents were submitted, the accounts were referred for scrutiny by the Commission's accountants and any issues arising have been or are being followed up separately.

The regulator concludes that the charities' trustees were in default of their legal obligations to file accounting information with the Commission, and this was mismanagement and misconduct in the administration of the Charity and a breach of trustees' legal duties.The reports also include the responses from the trustees about why the accounts were submitted late. Lack of action by accountants, alongside trustees' and accountants' health and family issues, featured. Even if reporting responsibilities are delegated, ensuring the accounts are submitted on time remains the legal duty of the charity trustees.

The four charities being looked into and reported on include Crawley Islamic Centre and Mosque; Michael Davies Charitable Settlement; The Muslim Cultural Society of Birmingham; and Bradford Christian School. 

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